What is SAP FI? Your Guide on SAP FI Process Flow.

For any newcomer to SAP ERP, the big questions that pop up in their mind are what is SAP FI module? How does it work, what are its benefits and How does the SAP FI Process Flow look like? Today I’ll answer these questions. SAP FI stands for ‘SAP Financial Accounting‘. In fact, it is a sub-module in SAP FICO that records all the financial transactions to generate financial reporting.

For all kinds of accounting entries, there are different sub-modules in SAP Finance. In other words, an SAP FI Process Flow contains sub-modules like SAP General Ledger Accounting, Accounts Payable, Accounts Receivable, Bank Accounting, Asset Accounting, and Special Purpose Ledger. Therefore, Irrespective of which sub-module is being used, all the financial transactions are recorded at the General Ledger level.

Besides, there is an SAP Central Finance (CFIN) module in SAP Finance to replicate data from the source system to the CFIN system on a real-time basis. However, it’s completely different from these sub-modules and you can learn more about CFIN error handling here.

General Ledger Accounting in SAP

In SAP Finance, GL Accounting manages the creation of General Ledger Accounts as well as the transaction postings. SAP Chart of Accounts (CoA) is a list of all General Ledger Accounts categorized based on account groups.

For example, you assign all the GL Accounts related to cash to the account group ‘Cash’. Similarly, you map the rest of the GL accounts to their respective account groups. You can learn to create a GL account in this article.

Types of Postings in SAP General Ledger Accounting

1. It allows you to park and post the transactions related to direct GL postings.
2. You can reverse the entries in the case of incorrectly posted transactions.
3. You can create new GL accounts, update the existing ones, and also delete them.
4. It allows you to post cross-company code transactions between multiple entities (called as company codes in SAP).
5. Also, maintain multiple ledgers to accommodate multiple currencies and to generate financial reporting according to different reporting standards.
6. Display GL balances report and clearing of open GL balances.
7. Interest Calculation on Bank/Loan GL Accounts.
8. Print Correspondence.
9. In addition, creation, and processing of recurring entries.
10. Foreign currency valuation process to convert the documents posted in foreign currency to local currency using the exchange rates maintained in the SAP system.
11. Manage Accruals, i.e., the revenue that the firm has earned but yet to realize it and the expenses that have been incurred but the firm has yet to pay.

Accounts Payable in SAP

In Accounts Payable, you manage the Vendor accounts and the transaction related to them. As a result, each vendor account is assigned to a ‘Reconciliation GL Account’ in SAP FI Module. In other words, whenever you post a financial transaction to a vendor account, the amount also flows to the assigned reconciliation GL account in the SAP Financial Accounting.

Types of Postings in SAP Accounts Payable

1. It allows you to park and post the transactions related to vendor postings.
2. You can reverse the entries in the case of incorrectly posted vendor transactions.
3. You can create new Vendor accounts, update the existing ones, and also delete them.
4. Also, it allows you to post cross-company code transactions between multiple entities (called as company codes in SAP).
5. Moreover, Display Vendor balances report and clearing of open Vendor items.
6. Print Correspondence.
7. Also Creation and processing of recurring entries.
8. Foreign currency valuation process to convert the documents posted in foreign currency to local currency using the exchange rates maintained in the SAP system.
9. Processing of Vendor Withholding Tax.
10. Automatic Payment Program (APP) to process automatic vendor payments and clearing of open vendor invoices.

Accounts Receivable in SAP

In Accounts Receivable, you manage the Customer accounts and the transaction related to them. Each customer account is assigned to a ‘Reconciliation GL Account’ in SAP Financial Accounting.

In other words, whenever you post a financial transaction to a customer account, the amount also flows to the assigned reconciliation GL account. In conclusion, the process is similar to the Accounts Payable with the only difference being the use of customer accounts instead of vendor accounts.

Types of Postings in SAP Accounts Receivable

1. It allows you to park and post the transactions related to customer postings.
2. You can reverse the entries in the case of incorrectly posted customer transactions.
3. You can create new Customer accounts, update the existing ones, and also delete them.
4. Also, it allows you to post cross-company code transactions between multiple entities (called as company codes in SAP).
5. Moreover, Display Customer balances report and clearing of open Customer items.
6. Also, Print Correspondence.
7. Creation and processing of recurring entries.
8. Also, a dunning process to send automated reminders to customers requesting payments of the outstanding amount by a specified date.

Asset Accounting

In Asset Accounting, you manage the Fixed Asset accounts and the transaction related to them. Each asset account is assigned to a ‘Reconciliation GL Account’ in SAP software. In other words, whenever you post a financial transaction to an asset account, the amount also flows to the assigned reconciliation GL account.

Types of Postings in SAP Asset Accounting

1. It allows you to park and post the transactions related to fixed assets.
2. You can reverse the entries in the case of incorrectly posted asset transactions.
3. You can create new fixed asset accounts, update the existing ones, and also delete them.
4. Also, the Posting of Asset Acquisition transactions.
5. Calculate and post asset depreciation by executing the ‘Asset Depreciation Run’ process.
6. Transfer Fixed assets from one location to another.
7. Retirement of fixed assets after its life is over.
8. Manage Assets under Construction (AUC).
9. Also, Display the Asset balances report.

Bank Accounting

In Bank Accounting, you manage the bank accounts, house banks, and their transactions. In fact in SAP software, for one bank account, you create one house bank and three different bank GL accounts namely Main bank account, Incoming bank account, and Outgoing bank account.

As a result, you post all your incoming payments to an incoming bank account, outgoing payments to an outgoing bank account. You also post bank statements to reconcile the data in the SAP system with the bank statements. Moreover, once the data has been reconciled, the postings will move from incoming or outgoing bank GL accounts to the Main bank account.

Types of Postings in SAP Bank Accounting

1. It allows you to park and post the transactions related to incoming/outgoing bank accounts.
2. Also, You can reverse the entries in the case of incorrect posted bank transactions.
3. Moreover, You can create new bank accounts, Bank Keys and House Banks.
4. Also in the Bank Key, you add the Bank IFSC codes and the complete address.
5. In House Bank, you add the bank GL accounts.
6. Also, Post manual and Electronic Bank Statements (EBS).
7. Display Bank Balances report.
8. Lockbox process which is a payment collection for customer payments.

Special Purpose Ledger

Special Purpose Ledger in SAP software are ledgers for reporting purposes. These ledgers can be kept at various account assignment objects like Cost Center, Profit Center, Business Area, etc. It allows you to report at various levels by collecting the data, combining it, and then creating the totals.

Types of Postings in Special Purpose Ledger

1. Perform Planning
2. Run Actual Postings
3. Moreover, perform Assessment and Distribution Allocations.

SAP FI: FAQ

I hope you liked this article on SAP FI Process Flow. Please do share it with others. Above all, keep following this blog for more tutorials related to SAP Finance Training.